de la Cuesta-Gonzales, M., Froud, J., & Tischer, D. (2020). Coalitions and public action in the reshaping of corporate responsibility: the case of the retail banking industry. Journal of Business Ethics. https://doi.org/10.1007/s10551-020-04529-x

Publisher's PDF, also known as Version of record License (if available): CC BY Link to published version (if available): 10.1007/s10551-020-04529-x

Link to publication record in Explore Bristol Research PDF-document

This is the final published version of the article (version of record). It first appeared online via Srpinger Nature at https://link.springer.com/article/10.1007/s10551-020-04529-x. Please refer to any applicable terms of use of the publisher.

University of Bristol - Explore Bristol Research General rights

This document is made available in accordance with publisher policies. Please cite only the published version using the reference above. Full terms of use are available: http://www.bristol.ac.uk/red/research-policy/pure/user-guides/ebr-terms/ Journal of Business Ethics https://doi.org/10.1007/s10551-020-04529-x

ORIGINAL PAPER

Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail Banking Industry

Marta de la Cuesta‑González1 · Julie Froud2 · Daniel Tischer3

Received: 28 May 2019 / Accepted: 4 May 2020 © The Author(s) 2020

Abstract This paper addresses the question of whether and how public action via civil society and/or government can meaningfully shape industry-wide corporate responsibility (ICR) behaviour. We explore how, in principle, ICR can come about and what conditions might be efective in promoting more ethical behaviour. We propose a framework to understand attempts to develop more responsible behaviour at an industry level through processes of negotiation and coalition building. We suggest that any attempt to meaningfully infuence ICR would require stakeholders to possess both power and legitimacy; moreover, magnitude and urgency of the issue at stake may afect the ability to infuence ICR. The framework is applied to the retail banking industry, focusing on post-crisis experiences in two countries—Spain and the UK—where there has been considerable pressure on the retail banking industry by civil society and/or government to change behaviours, especially to abandon unethical practices. We illustrate in this paper how corporate responsibility at the sector level in retail banking is the product of context-specifc processes of negotiation between civil society and public authorities, on behalf of customers and other stakeholders, drawing on legal and other institutions to infuence industry behaviour.

Keywords Corporate responsibility · Industry corporate responsibility · Business ethics · Retail banking · Stakeholder negotiation · Bank business model · Financial services · Spain · UK

Abbreviations PAH Plataforma de Afectados por la Hipoteca (Plat- BBA British Bankers Association (now UK Finance) form of People Afected by Mortgages) CR Corporate responsibility PCA Personal current account CSR Corporate social responsibility PLC Public Limited Company FCA Financial conduct authority PPI Payment protection insurance GFC Great fnancial crisis SB Savings bank ICR Industry corporate responsibility SME Small and medium size enterprises MYM Move your money TCF Treating customers fairly

Introduction * Julie Froud [email protected] The scrutiny by governments, non-government organisations Marta de la Cuesta‑González [email protected] and civil society that followed the Great Financial Crisis highlighted how banks can abuse their position as power- Daniel Tischer [email protected] ful economic intermediaries in pursuit of shareholder value creation. In particular, banks were observed to engage in 1 Departamento de Economía Aplicada, Facultad de value extraction through fees or speculative activities disem- Económicas y Empresariales de la UNED, C/ Senda del Rey bedded from the real economy (Muellerleile 2013) and have 11, 28040 Madrid, Spain collectively resisted calls for change, despite signifcant and 2 Alliance Manchester Business School, University sustained national and international uproar about unethical of Manchester, Booth St West, Manchester M156PB, UK practices. This is important for two reasons in relation to 3 School of Management, 2.06 Howard House, Queen’s the wider importance of banking in everyday economic and Avenue, Bristol BS8 1SD, UK

Vol.:(0123456789)1 3 M. de la Cuesta‑González et al. social life. First, as providers of banking, credit, insurance Lewis 2016; Schaltegger and Burritt 2010). Such initiatives and other services for small- and medium-sized business, do not in themselves embed and normalise responsible retail banks fulfl important intermediary and enabling func- behaviour. Indeed, the recurrence of socially and economi- tions (Froud et al. 2017). Second, access to fnance through cally irresponsible or unethical behaviour by frms individu- bank accounts and other fnancial services is essential for ally and collectively raises questions about whether organ- citizens’ economic and social participation (Schmidt et al. isation-level actions can provide a meaningful approach to 1999; Allen and Santomero 1998). In this sense, retail bank- tackle (fundamental) problems characterising an industry ing is a foundational infrastructure (Froud et al. 2018). Yet (Fernández-Olit et al. 2019). instead of ensuring this basic functionality, banks’ actions to Drawing on these important themes, this paper considers defend proftability have had deleterious efects on their cus- responsibility initiatives afecting frms across an industry tomers, including mis-selling of fnancial products, collapse which are the outcome of actions by industry stakeholder of small business lending, mortgage foreclosure and retail coalitions rather than arising through voluntaristic action. branch closures (Froud et al. 2017; Paulet et al. 2015; Vives- Such actions are considerably rarer than instrumental, frm- Miró and Gutiérrez 2017). These behaviours are contrary to level CSR, despite eforts by civil society to scale up collab- those we might expect from banks as socially responsible orations to target a whole industry (Den Hond et al. 2014). actors; and they are in contrast to the positive impact banks The beneft of assuming an industry perspective lies in what can have on fnancial inclusion, economic and social devel- Beschorner and Hajduk (2017) call ‘the downscaling efect’: opment (Fernández-Olit and de la Cuesta-González 2014). within an industry context, responsibility can be substanti- In principle, curbs on unethical bank behaviour could ated and thus made clear and manageable for companies and result from government action, investor-led initiatives or their stakeholders. The industry-level corporate responsibil- other pressures from external actors, whereby organisations ity (ICR) framework draws attention to ‘interactions between are compelled or at least encouraged to meet wider stake- businesses, NGOs, political actors and other organisations’, holder interests. Governments have tended to see this as the (Powell and DiMaggio 1991; Beschorner 2004) which may role of investors, and many businesses (including banks) be more evident at an industry rather than an individual frm have adopted investor-led corporate social responsibility level. In the specifc case of retail banking considered in this (CSR) initiatives to address expectations related to broader paper, ‘reform’ ambitions emerged before, during and after impacts on society, the economy and the environment (de the crisis, refecting a signifcant gap between bank behav- Bakker et al. 2013; Doh and Guay 2006; Schaltegger and iour and expectations of fair and efective fnancial services Burritt 2010; Steurer 2010). This positivist or instrumental held by civil society, private and business customers. Mis- approach to CSR recognises stakeholder demands for the selling of fnancial products, closure of bank branches (espe- primary purpose of sustaining or improving proftability and cially in rural areas), failure to lend to small- and medium- shareholder value (Esteban-Sánchez et al. 2017) but leaves sized enterprises (SMEs), as well as irresponsible lending limited opportunity to meaningfully alter business models on property have variously emerged as endemic problems or the ethical foundations of business (Sternberg 2011). requiring sector-level action (Fernández-Olit et al. 2019; This approach is also centred on easily quantifable aspects Froud et al. 2017). of responsibility (Maniora 2017) more than the impact of The paper addresses the question of whether and how pub- their intermediary activity on customer welfare and society lic action (via civil society and/or government) can meaning- (Fernández-Olit and de la Cuesta-González 2014). In this fully afect industry-wide corporate responsibility behaviour. sense, corporate responsibility has often been a documentary Where problems extend over a sector and challenge the basic artefact accounting for the positive impact of the business on function of retail banks from a stakeholder perspective, have society in annual accounts or standalone reports rather than actions to improve corporate responsibility been coordinated providing meaningful accounts of ethical business behaviour rather than left to the discretion of individual banks? To (Coupland 2006, p. 3). explore these issues, we focus on post-crisis experiences in Such reporting therefore becomes a way of recognising two countries, Spain and the UK. These are chosen because, aspects of behaviour that a frm can address—employee in both cases, there has been considerable pressure from civil diversity or carbon emission reduction programmes, or addi- society on the retail banking industry to abandon certain activ- tions such as sponsoring activities (Gao and Bansall 2013)— ities (mis-selling, repossessions) or counteract others (failure without business ethics efectively incorporated into deci- to lend to SMEs) to curb negative impacts on customers. Here, sions about the underlying business model (Maniora 2017; retail banks are economic and political actors (Matten et al. Sternberg 2011). It is not surprising then that critical observ- 2003; Scherer et al. 2006) and corporate responsibilities are ers suggest these instrumental approaches to CSR represent primarily viewed as reaction to wider changes in societal insti- corporate ‘window dressing’, in which social responsibility tutions (Dubbink 2004) and to civil society ambition to shift is treated as an add-on to core operations (Frankental 2001; corporate attention and resources towards societal challenges

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail…

(Scherer and Palazzo 2011). Socially responsible bank behav- and alignments of interests to afect the operation of frms iour is therefore not simply an outcome of immediate stake- in an industry. The analysis draws on the literature to holder pressures, but a response to democratic forces to curb address two questions: frst, how in principle ICR might corporate power towards enacting public needs (Driver and come about, either through industry leadership or coalition Thompson 2002; Parker 2002). building by stakeholders, before exploring resistances to Our analysis engages critically with Beschorner et al.’s change; and, second, what conditions might allow some (2013, p. 26f) conception of ICR as embedded in sector-spe- actions to be more efective, including the importance of cifc collaborative eforts between frms, government and other power, legitimacy, magnitude and urgency. stakeholders. Coalition building and alignment of interests are key success factors. However, the emphasis on ICR as collabo- ration can obfuscate the role of stakeholders in bringing about Industry Corporate Responsibility: From Proactive that change in the absence of industry engagement. Therefore to Reactive Agendas we introduce an alternative view of ICR as a politically charged negotiation between industry and its stakeholders. We choose An industry-level approach to responsibility represents retail banking to explore these themes because this industry a relatively new understanding of how frms collectively has been overwhelmingly inactive in responding to problems engage with stakeholder interests on a voluntary basis or caused collectively by its members. Rather, as explored in this under compulsion. Beschorner et al.’s (2013, p. 26f.) ICR paper, it has been civil society—with public authorities pro- framework draws attention to ‘interactions between busi- viding necessary though limited support—which has played nesses, NGOs, political actors and other organisations’, to a key role in recognising problems and engaging retail banks secure the adoption of corporate responsibility policies through a process of negotiated responsibility. From a bank as a specifc ‘organisational feld’ (Powell and DiMaggio perspective, such responsibility is reactive, or even coerced, 1991; Beschorner 2004). For this to be successful, busi- not developed internally (see, for example, Scholte 2013). ness, civil society and government actors necessarily share This analysis acknowledges that industries (and frms as assumptions about what corporate responsibility means their constituent actors) are primarily concerned with their in a specifc industry context. Beschorner et al. (2013) ability to continue with business-as-usual and may not initiate argue that, prior to the adoption of ICR, key stakehold- change, especially when profts will be afected. With this in ers (customers, worker organisations, civil society) col- mind, we show that ICR is driven by powerful and legitimate laborate and negotiate the type and extent of the policies, interventions from civil society and government. We focus on though they retain an industry-centric view, with stake- these actors not because they are the only possible agents of holders taking second stage. More recently, Beschorner change, but because they have the capacity to campaign for, and Hajduk (2017) advocate a cultural perspective to busi- or to pressure industry members to adopt more responsible ness ethics—cultural business ethics—within which CR behaviours. initiatives are linked to industry-specifc cultural contexts The next part of the paper explores the concept of ICR and institutional logics. Here they invoke the notion of and the role of interest alignment and coalition building in the organisational feld to situate concrete action through achieving a change in ethical behaviours. The Spanish and network interactions between stakeholders and core busi- UK retail banking sectors are introduced in the third section, nesses to reduce bias towards the company. which outlines the extent of corporate responsibility initiatives It is helpful to view ICR as an interactive political pro- since 2008. The fourth section then takes two examples to cess that requires negotiation, rather than one that is either explore the role of civil society in negotiations that eventually top down or bottom up (Dunning 2004), or indeed a com- led to actions. While notable, the impact of these actions is bination of both (Behrman 2004). However, the framing limited: successful actions have been fragmentary and indus- by Beschorner et al. (2013) and Beschorner and Hajduk try behaviour remains largely reactive, constituting individual (2017) creates an overly harmonious impression of this redress rather than a more generalised ethical orientation. The process, where, following debates and negotiation, par- implications are considered in the fnal section. ticipants can agree on appropriate industry actions. This in turn assumes that agendas are meaningfully represented by stakeholder and industry-led coalitions. A frm’s ability Coalitions and Industry‑Level Corporate to act is constrained by both the shared interests enshrined Responsibility in trade association membership and the associations’ own interests, which can have both positive and negative social In this section, we outline and develop the concept of industry-level corporate responsibility to explore how stakeholders may be able to negotiate through coalitions

1 3 M. de la Cuesta‑González et al. outcomes (Marques 2017).1 Moreover, industry-led coali- tions are likely to have diverse motivations, as indicated by Grayson and Jane (2013): they may proactively engage with social inequalities to pre-empt negative impact on industry and limit government oversight; or they may be a prerequisite for market access. Such coalitions can also be more instrumental in creating visibility for frms and industry to be seen as ‘responsible’ through benchmark- ing or codifcation. They certainly mobilise resources and provide a strategic space in which industry positions can be consolidated to engage external actors, including government and civil society (ibid 50f.). Coalitions may, therefore, be pre-occupied with controlling the narrative to legitimate their collective actions, for example, by set- ting responsibility agendas that are impactful but limit the efect on industry business models (Du and Vieira, 2012). Given these different possible motives, industry-led responsibility is likely to imply a limited notion of respon- Fig. 1 Infuences on industry corporate responsibility. Source: sibility that is commensurate with shareholder value priori- authors ties and some highly codifed, ‘ethics-light’ additions to the business model (Raiborn and Payne 1990). CR actions that are expected to reduce profts for any adopters will disincen- constructively with more fundamental, normative notions of tivise collective action (Sternberg 2011); and other actions ethical behaviour. which may allow some frms to enhance profts may be subject to frm-level gatekeeping, not industry-level action Stakeholder Coalitions as Drivers of ICR (Doane 2005). Under some circumstances industry can organise through self-regulatory institutions, for example, Drawing on these arguments, our framework focuses on as ‘green clubs’ to provide collective guidance and control how government and civil society can enable and infu- behaviour of members (Marques 2017; Beschorner et al. ence ICR. Figure 1 illustrates key interactions or path- 2017). For example, Tischer and Remer (2016) illustrate ways between civil society, government and industry to how social banking associations self-regulate conduct and enhance ICR, as well as sources of resistance. In response work towards common goals that seek to beneft society and to external pressure, industry may individually or col- environment. Extension of this to the whole of the banking lectively engage tactics such as lobbying or reporting; sector, however, is problematic because it requires agree- while government has means to enable or to obstruct civil ment on what is ‘right’ and what is ‘practical’ (Raiborn society’s ability to promote pressures for change (Clark and Payne 1990, p. 885). In other instances, ‘industry-led’ 2011). Ultimately the power of either civil society or coalitions at the national and global scale are a response government to change industry-wide behaviour is limited to improved coordination between civil society actors who (Dentchev et al. 2017; Carberry et al. 2017). For exam- may focus on industry directly, rather than government indi- ple, while civil society has developed persuasive (media rectly to enact change (Grayson and Jane 2013; Scherer and campaigns, shareholder resolutions) and disruptive (boy- Palazzo 2011). For example, recognition by civil society cotts, collective legal action) tactics, it lacks the ability to that ‘target setting’ or ‘best practice’ initiatives by govern- coerce frms directly into adopting ICR (Carberry et al. ment encourage industry adherence to minimum standards, 2017). Governments at diferent levels often approach ICR rather than seeking transformative action, can encourage through generic policy responses which are often fairly more direct or disruptive actions to pressure companies and inefective. The EU, for example, is integrating ‘sustain- industries to change (de Bakker et al. 2013). Under such cir- ability’ into a broad fnancial policy framework in order to cumstances, it is harder for industry-led initiatives to engage mobilise fnance for sustainable growth with support from industry and investors (European Commission 2018) as well as driving industry and government alliances, to the 1 Industry political donations in the US illustrate actions that seeks detriment of civil society which is insufciently included to protect ability to generate profts over responsible behaviour. This in these approaches (Moon and Vogel 2008). However, is particularly prevalent in fnance, energy and transport who fund political campaigns (OpenSecrets, 2019) seeking to avert regulation industry involvement in new sustainable fnance policies despite strong evidence that doing so harms society at large. could explain, for example, the slow pace of the review

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail… of the Capital Requirements Regulation (CRR2) and the Stakeholder Salience: Power, Legitimacy, Urgency Capital Requirements Directive (CRD 5), as well as the and Magnitude exclusion of an external evaluator in the new EU green bond standard (European Commission 2020). In line with the literature on stakeholder salience reviewed Even if we share Den Hond and de Bakker’s (2007) by Neville et al. (2011), we suggest that attempts to mean- optimism that civil society activism can infuence frm ingfully infuence ICR would require stakeholders to pos- behaviour directly, doing so may be more difcult when sess both power and legitimacy. Unlike Myllykangas et al. such activism targets general, rather than specifc, behav- (2010), the notion of power defned as having ‘power over’ ioural change of an industry. This is particularly the case [emphasis original] must be relaxed to include ‘power to’ where change means not simply ceasing specifc practices engage others in the process given the collaborative nature but developing a more ethical approach to future choices of negotiation. In line with these authors’ exploration of and activities. However, by aligning its interests with legitimacy as socially constructed and the general percep- government, civil society may be capable of infuencing tion that stakeholder involvement is ‘desirable, proper, or cultural and regulatory conditions of an industry; in other appropriate’, we consider that power must equally be seen words, it can create a political environment for the difu- in relation to the action performed and the actors involved. sion of its objectives (Carberry et al. 2017). The ability of The contextualisation required to make sense of power and civil society to re-politicise what is increasingly an attempt legitimacy is provided through accounting for urgency and by government to institutionalise CR (Moon and Vogel magnitude. Urgency is more widely adopted in discussions 2008) holds government more accountable in enforcing of stakeholder salience (see Tashman and Raelin 2013) legal obligations and societal values. In doing so, it creates defned as the degree to which claims require immediate a set of legitimate pressures on business to act responsibly. action, both in terms of time but also recognising criticality But, industry and government can also frustrate civil soci- of the form within the specifc context (Myllykangas et al. ety ambitions to drive ICR: for example, industry associa- 2010). However, little reference is made to the magnitude tions can resist change while also lobbying government; of required change. Where authors focus on magnitude, or industry-government relations may become shaped by they do so in terms of consequences (Brown et al. 2016) revolving-door arrangements or other forms of capture that or ‘signifcance’ of change (Shropshire and Hillman 2007). undermine third-party initiatives, including by displacing However, we argue that magnitude of change can also use- the agenda onto more trivial or peripheral issues (Tashman fully address the complexity of the task at hand, not just in and Raelin 2013). This leads to our second question: what terms of signifcance or consequence but also in terms of conditions might allow some actions—including coalitions the relational work that is required as part of the negotiation. or alignments of interest—to be more efective in produc- Getting a single actor to commit to sizeable change is dif- ing meaningful ICR? fcult enough; but successfully enacting magnitudinal change To identify potential factors that might shape ICR we across an industry is likely to be more difcult, especially draw on Mitchell et al. (1997), Neville et al. (2011) and when competitive agendas collide. Urgency and magnitude Ali (2017) to highlight a range of features—power, legiti- of the proposed action therefore both afect the ability to macy, urgency and magnitude—which in some combination infuence ICR, including attempts to develop more respon- might lead to industry-level initiatives. Mitchell et al. (1997) sible behaviour at an industry level through processes of develop a conceptual analysis of stakeholder salience based negotiation and coalition building. on power, legitimacy and urgency, while others propose dif- Collaborations between civil society and government are ferent typologies to help explain a greater degree of stake- therefore likely to be benefcial where substantive and/or holder orientation in proactive frms (Neville et al. 2011; Ali immediate change is required to efect more ethical behav- 2017). In trying to understand how specifc industry-level iour at industry level. For example, the MoveYourMoney initiatives might come about, the framework also needs to campaign, initially driven by civil society actors from 2009, incorporate how stakeholders (civil society and/or govern- led to the UK government creation of the Current Account ment) can create the conditions to promote responsibility Switching Service (CASS) in 2013 (Seyfang and Gilbert- without direct or proactive involvement of individual com- Squires 2019; Tischer 2013). In this case, the independent panies. This contrasts with an assumed need for stakeholders power and legitimacy of civil society and government was to capture the attention of companies or work with them enhanced by collaborative eforts: when government joined directly, which is prevalent in frm-centred CR debates. the civil society campaign, the impact was scaled up from half a million bank customers switching accounts prior to the introduction of CASS to 5 million since (Tischer 2013; Pay. uk 2019). Here, successful collaboration follows individual attempts to seek infuence. Initial diferences are overcome

1 3 M. de la Cuesta‑González et al. as actors consolidate and extend power and legitimacy, for cases, business may resist all attempts at enrollment by example, through formal electoral support from society, or civil society and/or government, especially if there is no less formally through campaigns. This can happen without (prospect of) legal requirement or a lack of collective pub- the explicit support of the industry and even where there is lic interest. active resistance refecting concerns for the proftability of The absence of industry-led CR might refect some members. degree of industry power vis a vis other interests—a Understanding CR initiatives as a process of negotiation belief that no signifcant consequences may follow from between key actors illustrates the complexity inherent in inaction—as much as a lack of organisation, even where improving responsibility at industry level and the role of there may be legitimate concerns. Power is, however, often diferent groups. Changes that result from pressure by gov- contingent and it may be mediated or created by specifc ernment or civil society for change, leading to legislative or circumstances. Business or industry perceptions about other actions, may be diferent to CR actions initiated by the when action is necessary will also refect the context, as sector. Holzer (2008, p. 59f) unravels some of the complex civil society or government responses to evolving prob- interactions between those seeking change (external coali- lems. As such, aspects of power and legitimacy aforded to tions) and the afected frms. In particular, he notes the pro- civil society and government are context and time specifc, pensity of diverse coalitions with dispersed power to assume not permanent or enduring attributes. Once irresponsible a passive role during negotiations as control over the process behaviour is corrected, actors may reorganise resources to is internalised by the frms’ top management. Such internali- focus on alternative issues (Rolof 2008). sation may also occur at the level of the industry, to either The framework, therefore, needs to refect the magni- reject or accept change, facilitated by industry associations. tude of the issue and the urgency with which it must be Coalitions, however, are brittle: they may be dominated by addressed; these might empower or alternatively under- a set of actors or they may be divided and seek to infuence mine the strength of coalitions or the ability of civil soci- ICR independently, which can damage legitimacy. All of ety to negotiate. For example, proposed ICR actions may these may enable or disable action by management across afect a set of frms across an industry equally, or dis- the industry to resist pressure for ICR; and it may therefore proportionately afect a subset of the actors by virtue of limit the power by civil society and government to afect process or product characteristics. The reasons for such industry behaviour (Holzer 2008). In other words, manage- considerations become clear if we think about what is at ment (or its representative trade body) may assume the role stake. In pushing for new, agenda-setting ethical policies of political broker, enabling them to strategically manage or actions that afect all players within an industry the stakeholder coalition interests or avert external infuence stakes are relatively high and, therefore, may be met with (Campbell 2007, p. 955). more (coordinated) resistance from the industry. Seeking If, however, ICR initiatives are to be understood as to infuence behaviour across an industry thus may require resulting from pressure of outside parties—civil society considerable resource to be spent compared to situations or government—what kind of power is implied, both in in which one frm is the target of civil society and/or gov- making change and in resisting it? Some instances of ernment action. In other cases, urgency (at least as per- power seem straightforward: government passes a law ceived by civil society and/or government) may become that requires a specifc behavioural change and instructs a more important driver and traditional forms of nego- a regulatory agency to enforce it. This results in a very tiation involving consultation and discussion (Campbell narrow kind of ICR because it refects compliance rather 2007) may not deliver desired outcomes. Thus, the nature than voluntary recognition of inherent stakeholder interest. of negotiation may be issue-specifc, refecting how power In the absence of voluntary action, desired changes may to infuence and resist is distributed amongst the various be sought via incentive systems or by introducing prin- coalition members. ‘Power’ here is to be understood as a ciples or frameworks that encourage better outcomes but fuid expression of changing contexts over time, refecting do not compel frms to adopt or desist from any particular the composition of and work undertaken by the coalition. practices. Power here takes a more social form (Dowd- For example, initial ambitious demands can become scaled ing 1996; Lukes 2005), which refects the ability of an down to realise more modest change; in this way, magni- actor (such as civil society or public authorities) to entice tude as a driver of signifcant change may be undermined and shape, rather than force, the actions of others (such by an urgent need to act or a willingness to compromise as retail banks), thus ‘furthering their own interests and/ with a more incremental or superfcial style of reform. Or, or afecting the interests of others’ (Lukes 2005, p. 65). magnitude or urgency around a particular issue can allow Power is also revealed through the extent to which one civil society to mobilise additional fnancial, political or actor (here, business) can decide how (if at all) to respond other resources that augment power and compel change. to the stakeholder initiative (Lukes 1976, p. 129). In some

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail…

Industry Corporate Responsibility Initiatives are an indicator of industry power so that the ability to in Retail Banking: Coalitions and Public pressure banks into adopting CR initiatives is restricted Action in Spain and the UK and/or requires considerable resources to be spent (Ford and Philipponnat 2013; Scholte 2013). However, a greater Corporate responsibility reports in the banking industry public focus on banking following the crisis made those have served the principal purpose of marketing to inter- resources available at both government and civil society ested stakeholders, including socially responsible investors level, generating numerous publicly available reports (see, and stock market index managers. From the perspective for example, on the UK: NEF 2009; CRESC 2009; LSE of the industry, this might be viewed as a cost-efective 2010). While much of the high profle censure has been way to deal with the demands of interest groups and focused on investment banking—for example, widespread enhance reputation, while avoiding signifcant and poten- market manipulation coordinated by leading international tially costly changes to business operations and conduct. fnancial conglomerates caused uproar internationally— Although most banks have published CR reports as part of retail banking has also been characterised by industry- their annual accounts or as standalone documents before wide misconduct, including mis-selling products to con- the crisis (Coupland 2006, p. 3), the quality and scope sumers or the lack of lending to SMEs as a result of credit of such reporting differs considerably between banks rationing (Dowell-Jones and Kinley 2011, pp. 202–203). (Novethic 2012, p. 5; Scholtens 2009, p. 4). Despite the Such actions have led to a lack of trust (especially of large emergence of the Global Reporting Initiative guidelines banks) among customers (Hurley et al. 2014); and this is (GRI 2013, p. 9; Roca and Searcy 2012), there has been despite the early adoption of CR by the banking indus- little standardisation of disclosures across the industry, try (Soana 2011). Not surprisingly then, the opinion poll even where specifc banking reporting standards or guide- data show that the responses to allegations of mis-selling, lines have been issued. Crucially, qualitative reporting is market manipulations and so on are directed at the retail unlikely to become widely established as promoters of banking sector as a whole, not simply at individual banks ESG and sustainable principles tend to prefer readily quan- (Populus 2017; YouGov 2018). In this post-crisis con- tifed data—such as greenhouse gas emissions or gender text, ICR initiatives that have arisen can be understood as equality—over qualitative data (Hiss 2013). The incorpo- refecting both magnitude and urgency. ration of ESG criteria in fnancial product creation further To illustrate the nature and efectiveness of industry-level commodifes sustainability as something that is quantif- CR in retail banking, the paper considers two countries, able (ibid); this is underlined in EU Sustainable Finance Spain and the UK, where signifcant pressures for change by Action Plan (EU Commission 2018). Industry stakeholders civil society and/or government can be identifed to address are also requesting more information on what is measured aspects of unethical behaviour. These two countries also pro- and how (see Freshfelds 2019), though it is unclear if this vide diferent contexts to explore post-crisis experiences in will go beyond reporting to address bank business models the same sector. Traditionally, Spain has a more coordinated in relation to ESGs (Siew 2015; Lyon and Maxwell 2011). market economy with a bank-based fnancial system, com- Even without an overall framework, assessment tools pared with a more liberal market economy in the UK and (see, for example, Novethic 2012) have been used as a a market-based fnancial system. Jackson and Apostolakou proxy to evaluate retail bank functions, narrowly focus- (2010) argue that diferent systemic environments foster dif- ing on easily obtainable parameters such as stakeholder ferent types of coordination between business and society, engagement, sponsorship and social engagement, and thereby producing distinct models or business organisations. financial inclusion; and some more industry-specific However, in the specifc case of retail banking there are also yet easily quantifable discussions of responsible lend- common features in terms of how responsibility concerns ing, responsible marketing and customer relations. The have tended to be mediated through the interests of private frst three can be understood as a response to stakeholder and/or business customers. As a consequence, there could demands and have (albeit minimal) cost implications; the be less potential for confict between these (customer) stake- latter three engage more directly with the market in sus- holders and industry, compared with other industries where taining or increasing customer numbers and lending, and stakeholders may have less obvious or concentrated ‘market thus are crucial to sustain proftability. power’. Elsewhere, CR initiatives have covered broader con- Pressure to maximise proft is deeply embedded at both cerns about the environment or human rights, where mobi- cultural and structural levels and has persisted post-crisis lising customers is only one part of the negotiations. despite public disquiet and declining returns (Froud et al. Nonetheless, we argue that retail banking is characterised 2017). Information asymmetries between bankers and con- by passivity despite the signifcant decline in trust noted sumers, civil society and government are signifcant and above: public discontent with retail banking both before and after the crisis has brought little change in the nature

1 3 M. de la Cuesta‑González et al.

Table 1 Retail banking Current Type of Mergers & Acquision Market share at year evolution of the top 10 Spanish Name of bank end banks, 2008–2018. Sources: a er 01 Jan 2013 before 31 Dec 2012 2017 2012 2008 IMF (2012a, b) and Scope Bank Ratings (2017) Santander private Banco Popular Banesto 22%19% 15% Banif BBVA private Caixa CatalunyaUnnim 17%15% 14%

CaixaBank private / Caixa Girona & La 15%12% 9% savings Banco de Valencia Caixa Banca Civica Bankia private / Banco Mare 11%9%6% savings NostrumCaja Madrid Bancaja and 5 small savings banks Sabadell private Banco Gallego Banco Guipuzcoano 9% 6% 3% Lloyds Bank Internaon S.A.U CAM Caixa Penedes Top 5 market share 74%61% 47% Bankinter private 2% 2% 2% Ibercaja savings Caja3 2% Unicaja savings CeissCaja Jaen 4% 3% 1% Kutxabank savings Caja Vital, Kutxa & 3% 3% BBK Abanca private Banco Etcheverria Nova Caixa Galicia 2% 3% 1% Top 10 market share 87%70% 51%

Banks participating in M&A and market share in brackets or extent of industry-led responsibility. Instead, attempts to attempts to change this, there has been an entrenchment of drive responsible behaviour come either from public authori- large players with similar business models and a high col- ties or are derived from civil society responses that mobi- lective market share. These are also banking systems which lise consumer or political power. Rather than leading ethi- have been the subject of widespread concern around treat- cal change, industry measures can generally be a response ment of customers, making them interesting cases to explore to—or compliance with—formal or regulatory initiatives. the nature and extent of ICR. This section uses secondary The lack of proactive industry change may appear surpris- data to outline key trends in the retail banking industries of ing given public discontent after high profle mis-selling both countries, the major issues for responsibility and the and eviction scandals in the UK and Spain respectively. In limited nature of change overall. the UK, the top 10 fnancial scandals since 2000 have cost Spain was severely hit by the fnancial crisis in 2007/08. banks £67.4bn collectively (FT 2019), yet market shares of The doubling of domestic lending by the banking sector the major players have been relatively unafected, refecting from 100% of GDP in 1995 to 215% in 2008 (Fernández- the perceived ‘hassle’ of switching and mimetic business Olit and de la Cuesta-González 2014) illustrates the scale models of banks (Panther and Farquhar 2004; Froud et al. of change in banking and the economy more broadly. Much 2017). To explore this further, we frst explore the context in of this newer debt was linked to a property boom: the mar- which stakeholder mobilisations took place in Spain and the ket for mortgage lending was efectively created during this UK. Secondly, in the next section, we take two examples and time, growing from €37.9bn in 1988 to €1065bn in 2008 analyse the actions taken by civil society, the extent to which and equivalent to 61% of total outstanding lending to the coalitions of interests have been formed and the outcomes of private sector (AHE 2012). Savings banks (SBs) were the the initiative in terms of embedding ICR. key players, with over half of the market for mortgages, and thus were most afected when the market turned in the post- The Retail Banking Context in Spain and the UK crisis recession. Some private commercial banks and, particularly, SBs The retail banking industries of Spain and the UK are both required substantial government assistance in the post-crisis characterised by a lack of diversity and, despite ofcial era; just as signifcant was the shrinking of the SB sector,

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail…

100 90 80 70 60 50 40 2008 2010 2013 2017

PCAs Top 6 Mortgages Top 6 BCAs Top 5

Fig. 2 Concentration in UK retail and SME Banking (market share Northern Ireland BCA markets are historically even more concen- in %), 2008–2017. Sources: CMA 2016; FCA 2018. Notes: SME trated (https​://publi​catio​ns.parli​ament​.uk/pa/cm201​415/cmsel​ect/ account concentration for England and Wales only [Scotland and cmtre​asy/204/20407​.htm)]; BCA data for 2017 are estimates leaving commercial banking interests the dominant force initiatives to increase SME credit through the public fnance (IMF 2012b) and abolishing a regional banking market agency (ICO) have also been developed but with little efect with government participation in favour of increasing stock (Ayuso 2013). More signifcantly, the new Savings Bank market control. Only two small SBs survived as many were Law (26/2013), issued to reorient SBs as a locally embed- bailed-out and converted to private banks. As Table 1 shows, ded sub-sector committed to fnancing SMEs, had no impact within a 10-year period, the Spanish banking sector moved given that most of the Spanish SBs had already vanished from a diverse industry featuring more than 60 institutions by 2013 and cannot easily be reinvented. In the absence of with diferent ownership structures and a regional bank- government requirements, banks have done little beyond ing market, to an increasingly consolidated and centralised ‘soft’ voluntary CR in areas like transparency and fnancial national system dominated by stock market listed banks with education. Thus, while responsibility initiatives have come only a dozen institutions (EBF 2013, p. 81). The number of from government, there has been little apparent or efective credit institutions fell by 43% between 2008 and 2016, and coalition building with civil society. Nevertheless, as we will by 2018 the fve largest entities accounted for over 70% of see in the next section, laws have emerged to protect custom- the market (in terms of total assets), an increase of more than ers from aggressive practices in retail banking as a response 50% in ten years and signifcantly above the average for the to civil society pressure and judicial judgements. euro zone (Cruz-Garcia et al. 2018). In contrast, the UK retail banking sector was charac- As a consequence, employees and branches have been terised by a high degree of concentration in a few global reduced by nearly one-third between 2008 and 2015 (Mau- fnancial conglomerates well before the crisis (Cruickshank dos 2017), though Spain still has the second highest bank 2000). Despite calls from government and elsewhere to branch network density in the EU-28. While some reorgani- increase competition, concentration has persisted in major sation of the banking network could be deemed necessary, retail banking markets (see Fig. 2), especially in personal it was initiated in a crisis context and continued in an unco- current accounts (PCAs), mortgages and personal loans ordinated way because this covers not simply the closure (ICB 2011, p. 166). In fact, crisis-related consolidation of branches to reduce operating costs, as in most European increased concentration in the UK market: the six biggest countries, but also the collapse of the savings bank sector. retail banks had a market share of more than 90% in 2010, The process of consolidation and concentration (FT 2013a) and have lost less than 5% since (FCA 2018). SME accounts was accompanied by a move towards a more homogeneous and lending have historically been even more concentrated: Spanish retail banking sector, with more competition and the top fve retained 83% of SME current accounts (CMA less collaboration between the remaining larger players as 2016), despite a recent increase in the number of challenger banks have moved out of their traditional regional bases. banks, including fntech. If these new banks do gain signif- Before the crisis, government action to promote CR in cant market share from the big players, it is not clear that this the Spanish banking sector focused on legal requirements will encourage more responsible behaviour. Arguably, the on good governance, transparency and reporting. While the attention on cost reduction is likely to continue (including post-crisis response refects some acknowledgement of prob- further branch closures) while the large banks seek to imi- lems, it has been limited and fairly generic. For example, the tate the digital technologies and product innovation and seek Spanish government followed EU and OECD guidelines on acquisitions of successful new entrants (Knight Frank 2018). fnancial education policies to improve fnancial literacy; and

1 3 M. de la Cuesta‑González et al.

As in Spain, reduced diversity is also a feature of the UK Government-led ICR initiatives have taken three forms: retail banking industry. This started in the 1970s with the promotion of new entrant—challenger—banks; encourage- opening up of the residential mortgage market (to break-up ment of lending to SMEs; and the principle of ‘treating cus- the ‘monopoly’ of building societies), continuing with the tomers fairly’ (considered in the next section of the paper). demutualisation of the largest societies and their subsequent The frst of these rests on the assumption that promoting take-over by established publicly listed banks before and competition is the mechanism to encourage existing retail after the crisis. In addition to this external threat, building banks to treat their customers well; this is a priority that societies have consolidated their activities through a series has led to a succession of investigations into the structure of mergers, reducing the number of active societies from of the UK retail banking sector, the most recent of which 481 in 1970 to 44 in 2017 (BSA 2018) and creating one reported in 2016 (CMA 2016). The encouragement of chal- large building society, Nationwide (holding more than 60% lenger banks—including ofering substantial fnancial sup- of sub-sector assets). Credit unions which fourished in the port to some new entrants under a Capability and Innovation US, Canada and Ireland, have never moved beyond niche Fund2 and simplifying the process of obtaining a banking status in the UK, despite some modest growth (Bank of Eng- licence—represents an attempt to reshape the market. Unlike land 2019). in Spain, however, there is no explicit preference for difer- In the UK, civil society has exercised voice by lobby- ent kinds of banks such as savings banks. While a number ing for and responding to public inquests using two chan- of new banks have entered the PCA and business markets, nels. First, civil society organised immediate (G20 protest this has had limited efect on the overall banking structure in 2009) and more sustained (Occupy London) forms of as many of these are small and present niche ofers; indeed, protest, as well as public campaigns for change (MoveY- a process of consolidation of new banks is already underway ourMoney; The Robin Hood Tax, Positive Money) and alter- (English 2019). native economy think tanks such as NEF, RePublica and The second main government objective, to foster lending Demos (see, for example, Positive Money 2012). But dissat- to SMEs, has led to initiatives directed at existing banks, isfaction with post-crisis reform was soon absorbed into the such as ‘Project Merlin’ launched in 2011. After this project wider anti-austerity movement as the long-term socio-eco- failed to meet targets (Independent 2012), a new initiative nomic consequence of the GFC outgrew the ‘fnancial crisis ‘Funding for Lending’ ran from 2012 to 2018 (Bank of Eng- frame’ (Pianta 2013), leading to more direct engagement land 2012)3 with similar results. Despite this, the limited with the policy process. Second, although often excluded extent of lending by banks to SMEs remains an ofcial con- from policy making at a formal level, civil society groups cern, and a new venture, the Business Bank, was established have submitted responses to regulatory initiatives, for exam- in 2013 with direct government support (FT 2014). Overall, ple, in response to the Independent Commission on Bank- UK government actions to encourage more responsibil- ing (Positive Money 2012; Ford and Philipponnat 2013). In ity across the industry have taken various forms including Europe, civil society has established Finance Watch in 2011 fnancial inducements and projects but these have largely not to ‘act as a public interest counter-weight to the fnancial involved efective coalition building. Within these broader lobby’ (ibid: 188). national contexts, the next section considers two examples In terms of post-crisis responsibility in the UK, public which show a greater degree of coalition building refecting bodies (regulatory agencies and government) have been the combinations of power, legitimacy, magnitude and urgency main source of initiatives, refecting frustration about the and mobilising new and existing organisations. limited changes to culture and behaviour from early and sustained civil society action. The rediscovery of regula- tion is in marked contrast to the previous explicit com- 2 mitment to the deregulation of fnancial services since the This fund has £425 million held in trust at the Bank of England and administered by Banking Competition Remedies Ltd to be spent in mid-1980s (Moran 1991) and, albeit short-lived, encour- four rounds or pools to support challenger banks that explicitly tar- agement of business-led CR using a market-based approach get SMEs. This fund was established after agreement between the UK (Shaefer 2013, p. 243). While there have been industry-led Government and the European Commission to implement the £775 programmes in fnancial services (such as around fnancial million RBS state aid alternative remedies package, resulting from the bailing out of RBS and the subsequent inability to sell Williams literacy), there is little evidence that these have led to sig- and Glyn Bank. See https​://bcr-ltd.com/wp-conte​nt/uploa​ds/2018/09/ nifcant changes in behaviour and business models (Froud Banki​ng-Compe​titio​n-Remed​ies-media​-facts​heet_fnal​.pdf for more et al. 2017). Banking crisis, and the ensuing unprecedented details. government intervention to support the sector, has led to a 3 This was supplemented by the Term Lending Scheme from 2016– marked rebalancing with changes to the regulatory frame- 2018 which underwrote an additional £15bn of lending, triggered by the Government’s attempt to boost the UK economy in the pre-Brexit work and a more active interest in retail banking by govern- period. https​://www.ft.com/conte​nt/dcd16​a09-1726-3904-909b-a0195​ ment, especially to increase competition. f2054​77.

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail…

Industry Corporate Responsibility a high profle and extended action, yet the extent of respon- Initiatives: Two Examples of Coalitions sibility has been limited to specifc redress, not behavioural and Public Action change by retail banks. Nor has it shifted government policy in ways that prevent future mis-selling. Following our theoretical framework, we present two These cases are developed using secondary data to inform emblematic examples to analyse how the magnitude and understanding of the nature and scale of the process, the urgency of industry bad practices provoked coalition build- actions taken by civil society, formal responses by govern- ing initiatives from civil society and changes at industry ment and public authorities and the perspectives of citizens, level. These were selected because they refect important as set out in the media of diferent kinds. In each case, the and legitimate issues where banks have acted against the secondary data are used to trace the development of the interests of their own customers. In both cases, civil society problem, the critical interventions by civil society and the action was central in helping to collectively organise the forms of response by government and other public authori- interests of individual customers and in doing so increase ties, including aspects of coalition building, and the extent the urgency of the problem and the legitimacy of the of short- and long-term change. The major sources for the action; moreover, civil society action prompts some form of Spanish case are statistical data from CGPJ (The Span- response by government and other public authorities which ish National Council on Judiciary), ofcial court reports, is necessary to efect change. In each case, we describe the PAH reports and media articles. UK data are drawn from problem, the characteristics of the negotiation process, the regulatory authorities, Citizens Advice, media and other actors involved, the reaction of public bodies and industry commentaries. and the limitations of this process, taking into account the diferent contexts. Example 1: Protecting Mortgage Debtors Against The frst case, protecting mortgage debtors in Spain, is a Repossession in Spain signifcant and unprecedented example of mobilisation of power given Spain’s low level of consumer activism. In this This frst example is concerned with the relationship between instance, a coalition was built between bank customers with banks and residential mortgage customers: the efectiveness mortgage arrears and other citizens concerned with social of coalition building is a consequence of broadening the justice. The bottom-up coalition drew power and legitimacy issue beyond a simple market relation to invoke the wider from the magnitude of the problem (around half a million social justice implications of bank behaviour, which was households facing or experiencing eviction by their banks) critical to establishing legitimacy. What is also striking and the urgency that relates to the potential and visible harm about this example is that civil society was able to co-opt that eviction can cause, especially to vulnerable people. judicial processes to more efectively bring government into PAH, as a new, civil society organisation worked efectively alignment. However, while there are demonstrable changes and persistently to exert pressure on banks via judicial action in bank behaviour in some respects, as outlined below, there and, later, government action. The direct outcome is changes is no clear evidence of underlying ethical shifts in banking in bank behaviour in relation to these afected households, practice led by the industry. but this has not extended to any more general embedding of Lending practices in Spain before the crisis increased responsibility. There may, however, be more enduring efects home ownership. After the crisis, however, rising unem- through the demonstration of efective civic action, making ployment contributed to the growing number of mortgage future stakeholder coalitions more likely. holders unable to meet payments, resulting in mass evictions The second case, the response to mis-selling of fnan- by the banks: an estimated 500,000 releases or evictions cial products by banks to UK customers, was made urgent occurred between 2008 and 2013 (PAH 2014). Public outcry through the action of an established, well-resourced civil about the social consequences of eviction and homelessness society organisation, Citizens Advice. This organisation led to the establishment of a civil society movement, the used legal process to challenge government inaction in Spanish Platform of People Afected by Mortgages (PAH) response to massive mis-selling which afected millions of in 2009, which campaigned for more considerate treatment bank customers. While the failure of an insurance policy on of distressed debtors. PAH is notable as a social movement a fnancial product such as a loan is perhaps less serious for because it changed the framework surrounding the eviction the individual customer than a potential eviction, the sheer problem, while also creating nationwide awareness of the scale in the second case provided legitimacy. The success- resulting injustice. De Weerdt and García’s (2016) analysis ful legal action rebalanced power away from the banks in of this innovative social movement found that PAH empow- relation to this issue and required government to align itself ers people through solidaristic actions to place collective more explicitly with customer interests. Again, this has been pressure on legislative bodies, governments and banks. Newly established collective communication channels

1 3 M. de la Cuesta‑González et al. enabled these groups to reach agreements with banks to et al. 2013). The success of PAH is underlined by subse- renegotiate or even condone debts, or to extract socially quent legal action brought against Blackstone, the largest benefcial terms from banks, such as payment in kind or owner of housing in Spain with some 40,000 homes. PAH a social rent. These authors conclude that PAH has been has accused Blackstone of committing a crime of ‘hoard- successful in arguing that the debt problems experienced by ing’ empty homes and ‘deceptive alteration of the price of Spanish households are not the result of individual failure things’—buying repossessed homes at a low price and then but a consequence of business decision making and practices withdrawing them from the market to sustain high rental that put proft ahead of the consumers. values and purchase prices—which are illegal (PAH 2018a). The success of the campaign against evictions refects This is a particularly sensitive political issue as social hous- coalition building around an urgent issue. PAH enlisted the ing for rent provides only 1% of Spanish homes (compared EU Court of Justice, which ruled against the evictions and with around 20% in the United Kingdom, France or Ger- gave Spanish courts new power to stay evictions (FT 2013b). many) and there are 3.4 million empty homes. Resulting legal and social pressure led to the issuance of the While a remarkable and unusual example of organised cit- Royal Decree Law 6/2012—a mechanism that allows urgent izen action, it is important to ask whether this has enhanced laws to be passed—to protect mortgage borrowers. This responsibility more generally in Spanish retail banking. The introduced a series of measures, including a voluntary Code efectiveness of PAH’s social action and heightened aware- of Good Banking Practice which included exceptional meas- ness of bad practice has encouraged consumer associations ures for the resolution of defaults of people in difcult social and lawyers to engage in a context where traditionally there conditions. A subsequent law (1/2013) and amendments has been limited consumer mobilisation. However, it is not formalised detailed measures to protect mortgage debtors, clear that corporate behaviour has changed more generally. debt restructuring and social rent, and thereby recognised For example, between 2007 and 2018 there were more than the social consequences of eviction which had been initially 500,000 evictions in Spain due to mortgage non-payment ignored by national government.4 In an attempt to prevent and, in recent years, this fgure has been increased by rent future bad practice the law also promotes more responsi- evictions (PAH 2018b). Rather than preventing future uneth- ble lending, limiting mortgages to a period of 30 years and ical behaviour, further bad banking practices have emerged. a maximum loan-to-value of 80%. However, the law does The insertion of foor clauses in mortgage agreements, for not universally and retrospectively alter payments as PAH example, meant that consumers would not beneft from had argued for, though it includes a two-year suspension reductions in EURIBOR rates, but were liable to pay more of evictions in cases of ‘special vulnerability’. As a result, if this rate went up. This was deemed an ‘abusive practice’ property can only be repossessed and sold when restructur- by the courts and a 2017 royal decree established an extra- ing is impracticable under specifc conditions, according to judicial channel to settle disputes (BOE 2017) and by end of the Code of Good Banking Practice. 2019, over €2.2 billion was returned to Spanish consumers.5 The PAH example illustrates social innovation by organ- These and other practices have undermined public trust in ised citizens fghting for social justice. The coalition has banks, with signifcant judicial proceedings still awaiting incorporated support from 200 collectives and labour unions, resolution (Spanish Central Bank 2019). Overall, this case more than 100 city councils which have approved motions in demonstrates that banks’ reaction to civil society pressure favour of the demands of PAH and from political groups in may not result in any generalised corporate responsibility 14 regional parliaments across Spain (Bhandar 2015). This but can have issue-specifc consequences. Business model has produced political action which has shaped governance pressures remain focused on a single-bottom line and civil through creation of new mechanisms for collectively nego- society initiatives lack the (legislative) muscle to drive tiating housing debts with fnancial institutions, while also meaningful and far-reaching changes in corporate behav- infuencing new local and regional regulations for access to iour across an industry. Government action was necessary housing for mortgage victims. By reframing the issue as a to achieve the outcomes supported by civil society and, later, collective problem—governments have used an ‘individual the judiciary, though there was no immediate response by approach’, the PAH has focused on collective responses to government to enact structural policy changes to prevent social problems—PAH’s campaign contributed to new ways poor behaviour by banks. of conceptualising and approaching policy problems (Pradel

4 For details, see Law 1/2013 Measures To Strengthen The Protec- tion Of Mortgage Borrowers, Restructuring Debt And Social Rental, Royal Decree Law 1/2015 of 27 February and Royal Decree Law 5 See: https​://elpai​s.com/econo​mia/2019/12/11/actua​lidad​/15760​ 5/2017 of 17 March. 98707​_97432​2.html.

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail…

Example 2: ‘Treating Customers Fairly’ annual premium of £5.3bn, compared with £8bn and £9.5bn, and Mis‑selling in the UK respectively, for property and motor insurance. Through their individual charities they observed the massive extent Treating customers fairly (TCF) has been an officially of customer dissatisfaction, though this was disputed by the endorsed general principle in the UK since 2006 (Shaefer industry. In particular, it appeared that lower income and 2013), applying not only in banking but in other utility sec- vulnerable customers were more likely to have been mis-sold tors like energy. TCF in retail banking was renewed post- these insurance products (Citizens Advice 2005). crisis after a review of the regulatory framework on fnancial Citizens Advice collected individual cases to make a services and the creation of the new regulator, the Financial ‘super complaint’ to the regulator, the Financial Services Conduct Authority (FCA). TCF encapsulates a basic ethical Authority, in 2005. Public authorities responded to this civil principle to which all organisations regulated by the FCA society action by putting in place a system of fnes and com- must adhere: a bank ‘must pay due regard to the interests of pensation for customers who could demonstrate they had its customers and treat them fairly’. If the principle is embed- been mis-sold PPI. Far from recognising their responsibili- ded in bank behaviour then it should deliver six outcomes ties, banks via their trade association the British Bankers’ which collectively represent ‘fair’ treatment (FCA 2013). Association (BBA) initially mounted a legal challenge to This is not a regulatory framework, nor a set of benchmarks the requirement to pay compensation and indeed continued for behaviour; enforcement is via an Ombudsman and inves- selling these products for years. In 2011, the BBA lost a tigations when things go wrong. However, under a self-inter- legal case against new rules intended to prevent mis-selling, est argument, it might be expected that banks would have which were to be applied retrospectively, hence opening up an interest in following TCF to ensure that (mis)treatment further claims from customers (Guardian 2011). In the end, of customers does not contribute to future scandals, reputa- the industry had no option but to pay the regulatory fnes and tional damage and fnes, as well as contributing to rebuilding customer compensation. UK retail banks created enormous trust in the retail fnancial services sector. provisions in their fnancial accounts to meet the compen- The survival of TCF as a regulatory initiative refects the sation costs6: by 2019, some £36bn had been paid out by continued need for improved transparency and fair treatment, British banks (FT 2019). The issue of corporate responsibil- rather than its success in enhancing and enshrining respon- ity is relevant in two ways: the frst is the sale of the fnan- sibility. The renewal of TCF in 2013 was amidst a series of cial product by banks, including whether it was suitable for mis-selling scandals, most notably of payment protection the customer and clearly explained to them; the second is insurance (PPI), an insurance policy sold by banks and other how banks handled the complaints of mis-selling. To some fnancial institutions linked specifcally to debt and credit extent, the second issue gained a heightened signifcance in products. The scale of mis-selling suggests a mass failure by some of the reporting by public authorities, perhaps because the sector to follow the TCF ethical principle (and a failure this could be measured and audited more easily than the of public authorities to take remedial action). Moreover, this more fundamental concerns about how banks treat custom- was not the frst instance of mis-selling by UK banks. Earlier ers. For example, the FCA notes in 2014 that frms have mass episodes of unacceptable behaviour in relation to sell- improved the way that they handle complaints, though does ing private pensions and endowment mortgages in the 1980s not comment on whether selling practices are more ethical and 1990s (Ferran 2012) had not reformed the incentives (FCA 2014). systems and culture within banks which allowed serial mis- The regulator has since banned certain products and selling to thrive. The original failures of mis-selling were attempted to address selling practices more generally. How- compounded by the way that banks dealt with customers ever, a good test of industry-led responsibility might be who complained. As a result, fnes were imposed by the whether bank business models have become less reliant on FCA on some banks for mis-handling complaints (see, for cross-selling (often unsuitable) fnancial products, thereby example, FCA 2015). embedding the principle of fair treatment of customers In the specifc case of the mis-selling of PPI, the inter- into routine practices. While banks have withdrawn some ests of customers were taken forward by Citizens Advice— products, as required by the regulator, evidence of further a network of charities that provide free legal information mis-selling has followed the PPI scandal, suggesting that and advice—which became increasingly aware of the large TCF is still not being adopted by banks. For example, in number of policy holders who had made claims under their policies and been refused pay-outs (Citizens Advice

2015). As PPI products became more widely sold, it was 6 more likely that they were unsuitable or at least represented Between 2011 and November 2013, the banks paid out £13.4 bn in compensation with total provisions reaching nearly £20 bn in early very poor value. Citizens Advice noted in 2005 that there 2014 (FT 2014). The total cost of compensation for PPI is estimated were estimated to be 20 million live PPI policies with an at £34.2bn by March 2019 (FCA 2019).

1 3 M. de la Cuesta‑González et al. late 2013, Lloyds Bank was fned £28 m and expected to banks. Focusing on Spain and the UK, we have provided an pay out £100 m in compensation after a new expose about overview of developments in this sector since the GFC to mis-selling a range of fnancial products by staf (Guardian highlight the very limited extent of industry-led corporate 2013). It is no surprise that claims management has become responsibility. Two examples which represent exceptional an industry in its own right: these companies are looking out cases of civil society action making problems visible—and for new potential sources of mass claims, including mort- to some extent mobilising government and other public gages (again) and packaged current accounts which ofer authorities—have been analysed to explore the ways in a bundle of services in return for a fee (FT 2019; Which? which such action refects power and legitimacy of actors 2018; Francis 2019). and the urgency and magnitude of the issues in the building In this example, civil society action was central to of coalitions around banks. The examples were chosen to addressing the massive consequences of mis-selling, by highlight civil society responses to responsibility problems helping to collectively organise the interests of individual across an industry, as well as the importance of some follow customers and in doing so increase both the urgency of the up through policy or regulatory change. Through these we problem and the legitimacy of the action. More broadly, the demonstrate the value of focusing on corporate behaviour at sustained failure of UK banks to improve their treatment of the industry rather than the frm level. customers has provided an interesting opportunity for social The banking industry examples analysed have allowed movements to raise public awareness. For example, Move us to explore the cultural business ethics perspective Your Money claims some success in encouraging switch- (Beschorner and Hajduk 2017) in which the industry is a ing away from the big banks; though the impact on their frame for actors linked to each other by a web of shared business models or behaviour is uncertain. In essence, the beliefs and network-like relations, and with apparently simi- initiative represented a market-based approach to irrespon- lar understandings of CSR (the materiality of issues, the sibility, with consumers encouraged to exercise their power legitimacy of stakeholder demands, and the role of govern- by changing their bank. ments). Within an industry context, responsibility can be To sum up, this section has analysed two initiatives where substantiated and thus made clear and manageable for com- actions led by civil society, with responses from government panies and their stakeholders. Retail banking is an appro- and other public bodies, have had some impact on the bank- priate case to illustrate the signifcance of responsibility ing sector. In both cases, action to address a lack of corpo- initiatives at industry level, particularly in relation to the rate responsibility is the response to the results of coalitions inadequacy of frm-level CR to prevent or respond to prob- formed around banks, not a spontaneous act or corporate lems. The fnancial crisis and ensuing challenges to business priority. To the extent that ICR has been enhanced, it is reac- models added urgency and magnitude in ways that could tive not embedded in bank practices. In the Spanish example potentially unsettle established behaviours and strengthen of mortgage holders facing eviction, civil society pressure legitimacy of civil society organisations. As argued in the has worked through public authorities to convert social paper, retail banks have a longstanding engagement with concern into regulatory requirements which strengthened company-level CR but this has not prepared the industry for protection for borrowers. In the UK example of responses dealing with the consequences of irresponsibility or unethi- to widespread mis-selling, civil society action had the efect cal decisions through initiatives or preventative actions. of raising the profle and achieving redress for individuals The analysis shows that in these retail banking cases, ICR via massive compensation, but without necessarily chang- came about through coalition building by stakeholders. It ing bank behaviour. The implications of these examples are is evident that proactive or industry-led corporate respon- explored in the fnal section. sibility was limited to more trivial issues (Tashman and Raelin 2013) and there was little evidence of any incentive for industry collective action (Sternberg 2011) to initiate Discussion and Conclusion change. Instead, banks have been compelled to act following the mobilisation of power through legal processes and (even- This concluding section refects on the initiatives discussed tually) the enrolling of governments. Overall, the analysis in in the paper and their implications for understanding corpo- this paper has illustrated how corporate responsibility at the rate responsibility at an industry level. Here we come back sector level in retail banking is, frst, the product of context- to our theoretical framework to highlight several issues aris- specifc processes of negotiation between the sector, civil ing from the empirical analysis that can be used to frame society and public authorities, on behalf of customers and subsequent research and to inform policy. The paper set out other stakeholders; and, second, has only limited momentum to address the question: whether and how public action (via in enabling behavioural change beyond the initial catalysing civil society and/or government) can meaningfully afect events. industry-wide corporate responsibility behaviour by retail

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail…

In both cases, and particularly so in the Spanish case, creates opportunities to efectively engage in negotiations coalitions are created in highly politically charged con- around remediation, despite resource limitations. As we have texts. Set up in response to widespread bad practice and seen, the magnitude and urgency of customers claims and government inactivity, PAH was initially unable to claim demands (e.g. see Mitchell et al. 1997) have allowed civil legitimacy. Nonetheless, the scale of the problem addressed society to mobilise additional fnancial, political, legal or and the public interest created soon established PAH as a other resources that supplement individual power and com- legitimate civil society actor, able to legally challenge both pel change through the intermediation of regulatory or other governments and banks. PAH efectively created a political changes. These were the main conditions that allowed efec- environment which allowed the difusion of its objectives, tive actions through a process of negotiation and coalition in line with the argument of Carberry et al. (2017). This building in our examples. Thus, civil society action was cen- pivoted around the idea that evicting mortgage debtors was tral to addressing the massive consequences of mis-selling, morally and politically unacceptable. In the UK case, the by helping to collectively organise the interests of individual issues were clearly less politically charged, yet the sheer customers, represent them in legal processes and in doing scale of the issue—the millions of bank customers sold inap- so increase the urgency of the problem. It should be noted, propriate insurance products—created a legitimate political however, that even though initiatives led by civil society can force based on evidence of unethical practices. Here, our lead to changes in the way industries are required to act, this analysis supports Myllykangas et al. (2010), who argue that does not imply that government priorities or objectives are legitimacy has to be socially constructed, rather than aris- necessarily aligned with those of civil society stakeholders. ing from priorities set by government or industry. The post- Where they do exist then, stakeholder coalitions are tempo- 2008 campaigns against banks are to this extent refective of rary and contingent. broader movements about capitalism, inequality and climate In understanding how stakeholder pressure works, we justice, as well as the specifc unethical practices. can draw a distinction between consumer and social pres- Our examples support the argument that attempts to sures. Consumer pressures involve those directly afected meaningfully infuence ICR require stakeholders to possess by irresponsibility such as mis-selling, whereas social pres- both power and legitimacy (Neville et al. 2011). Civil soci- sures refect a broader constituency: for example, PAH is ety has limited direct power but can access it through actions not simply comprised of those who are or might be evicted and coalitions: in both examples, civil society stakeholders but represents a more general discontent about bank behav- derived power through collective action. The UK example iour on behalf of afected citizens. This would seem to be showed how mis-sold customers were brought together by a stronger and extendable basis for a coalition of interests Citizens Advice, a civil society organisation with legitimacy as it presents problems as a general failure to meet citizen based on longstanding eforts on behalf of consumers. In the needs, rather than harms done to individual customers. Coa- Spanish case, action came about through creation of a pres- lition building here responds to ethical issues which relate sure group with wider membership to campaign initially for to housing in this specifc instance but could equally cover mortgage debtors; subsequently, PAH has been the basis of access to energy, water and sanitation, transport, legal aid wider campaigning on issues relating to rights to housing. or other essential material and social infrastructures. When Such collectivisation is critical because, although retail the unethical behaviour of banks or other industries impacts banking customers are legitimated stakeholders who should on citizens’ welfare or even their human rights, corporate be able to exert pressure on business to act responsibly, it responsibility becomes a political issue and legislative, exec- is difficult to articulate individual power for many rea- utive and judicial powers can be used to guarantee or at least sons. First, information and resource asymmetries between support these rights. In these instances, it is social pressure banking institutions and customers reduce individual’s through established or new civil society organisations rather power despite the ethical legitimacy and magnitude of than individual pressures, which are efective. Here, we can their demands. Customer fnancial illiteracy and mimetic draw another interesting comparison. While PAH in Spain practices of most retail banks also constrain the ability and initially lacked legitimacy as a new organisation seeking opportunities of individual customers to negotiate with power to change bank behaviour, Citizens Advice in the UK banks. Even when they are aware of their rights, the costs of had more immediate credibility, as well as legal and other pursuing them will be an obstacle to individual remediation. resources to draw on. Yet, Citizens Advice is also limited in However, our examples show how under specifc conditions, scope by its success in advocating for consumer rights, while the magnitude or scale of unethical practices provides oppor- PAH can develop innovative responses to institutional fail- tunities to collectively organise, create visibility for the issue ures through creating new stakeholder coalitions outside its and accumulate pressures for subsequent—albeit limited— original ambit. While the specifc nature of the civil society action by government and other public authorities. The abil- demand and the context in which problems arise are likely ity of civil society to formalise claims of misbehaviour then to be important, the negotiating capacity of the actors is a

1 3 M. de la Cuesta‑González et al. driving force. As a result, PAH was able to make evictions Retail banks have also failed to design and market prod- an issue that could mobilise legal and political response even ucts that meet the needs of customers in transparent ways, while other contemporaneous civil society demands, such as especially given many customers’ lack of fnancial literacy, around public health and education, climate change or tax asymmetrical information and inertia. reforms, did not deliver the same level of success. It is possible, of course, that episodes such as those we Notwithstanding these distinctions, in each case responses have analysed in this paper could eventually contribute to by public bodies have been efectively mobilised through the development of industry-led corporate responsibility that the accretion of pressure, with regulatory or policy action recognised stakeholder interests and avoided such unethical triggered by an event (e.g. the super complaint on PPI mis- practices in the future. Such action would obviate the need selling). Efectiveness here is dependent on the ability of for regulatory responses by public authorities and would civil society to draw on legal or regulatory processes that avoid extended, high-profle legal processes aimed at seek- governments cannot ignore. But, even where reactions to ing redress for specifc customers, resulting in substantial industry-level problems have been efective, they have taken fnancial penalties. From a self-interest argument, our exam- time to initiate and some have attracted resistance. In this ples might suggest that retail banks could change behaviour sense their development refects processes of negotiation to avoid repeated reputational and fnancial damage. To this that take place outside the sector, and indeed in the PPI com- extent, policy implications would be limited perhaps to the pensation case, legally challenged by retail banking interests. importance of safeguarding and promoting opportunities for In the Spanish case, the judicialisation of the process and the civic action to support accountability. This would imply that role played by the courts have transformed individual claims the industry assumes stakeholder interest as a goal itself and into societal and political claims with regulatory reforms. As not as a means to other ends. for the banks, the industry response can be characterised as Our analysis would suggest caution, however, in assum- reactive. In both cases, banks fought both civil society and ing such an outcome because of the persistence of share- regulators to limit their fnancial responsibilities until the holder value as a corporate objective for most banks (Froud point where they had to comply and, in the UK example, et al. 2017). The Spanish and UK examples provide diferent face unprecedented costs. Interestingly, these defeats were contexts for the enactment of shareholder value: in Spain, followed neither by explicit actions to regain customer trust rapid changes as the sector has moved towards a less diverse nor attempts to strategically manage stakeholder coalitions retail banking ecosystem provide an unstable backdrop to to limit external infuence (Campbell 2007, p. 955). In this high-profle stakeholder initiatives; while in the UK, mis- sense, the sustained failure of UK and Spanish banks to selling refects long-running problems in a retail banking improve their treatment of customers (borrowers and sav- sector where shareholder value-driven business models ers) has provided an interesting opportunity for social move- have dominated for 20 years. Though the historical context ments to raise public awareness. is diferent, changing bank behaviour in both countries is While both examples discussed in the previous section made difcult by the imperative for fnancial returns in busi- have had a high political and media profle—and have led to ness environments that are more challenging. This relates extensive redress—there is no indication that they will solve not simply to normative notions of ethical behaviour but the underlying problems of unethical behaviour. The limited to questions of practicality and attainability (Raiborn and efectiveness of the initiatives can be partly explained by Payne 1990, p. 885). There has been recent debate more the reactive processes that deliver them and by the scale of broadly about the importance of long-term corporate objec- the challenges. To some extent this refects the underlying tives and meeting the needs of stakeholders more broadly, efective power of the banking industry in relation to both as illustrated by the US Business Roundtable restatement of government and civil society; but it is also a consequence the purpose of the corporation (Business RoundTable 2019), of broader socio-economic issues. What then are the policy but there is little evidence as yet that this presages signifcant implications of this analysis? change in business models. The calls for changes to retail banking in Spain and the In such an unpromising environment for progressive UK discussed in this paper refect signifcant socio-eco- policy, several possibilities can be highlighted. First, dif- nomic issues central to the functioning of a banking system ferent behaviours may be more likely to come through and requiring coherent action across the sector, rather than encouraging new kinds of banks (e.g. mutuals) which company-level discretion. Our analysis shows that banking ofer customers a diferent model; or through controls on does not necessarily or efectively fulfl its intermediary banking which more vigorously protect customers from function to support citizens and the (productive and social) unethical behaviour, rather than relying on compensation economy (Fernández-Olit and de la Cuesta-González 2014). after the event. In the case of retail banking, development For example, banks over-lent to households in Spain to buy of a more relational business model in which the needs houses, while they have under-lent to SMEs in the UK. of customers can be met with appropriate products and

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail… services and delivered with better advice and accurate capacity of actors to infuence and change industry behav- information may help avoid actions that disadvantage cus- iour both individually and through coalitions. tomers (Fernández-Olit and de la Cuesta-González 2014). Digitalisation processes in the banking industry could help in principle as banks have access to large amounts Authors’ Contributions All authors have been personally and actively involved in substantive work leading to the manuscript, and will hold of data, which allows them to ofer personalised products themselves jointly and individually responsible for its content. and services to customers to meet their fnancial needs and not just business objectives (García Montalvo 2014). Compliance with Ethical Standards But digitalisation processes will not necessarily improve transparency and the quality of fnancial advice and mar- Conflict of interest The authors are not aware of any confict of interest keting. Some early scandals involving fntech frms suggest in relation to the research reported in this paper. that these new actors have picked up ‘some bad old habits’ displayed by larger incumbents (FT 2016). Open Access This article is licensed under a Creative Commons Attri- bution 4.0 International License, which permits use, sharing, adapta- Second, government cannot abdicate corporate respon- tion, distribution and reproduction in any medium or format, as long sibility to (product or capital) markets, but equally, coali- as you give appropriate credit to the original author(s) and the source, tions with civil society are important in directing gov- provide a link to the Creative Commons licence, and indicate if changes ernment and holding it to account. The examples in this were made. The images or other third party material in this article are included in the article’s Creative Commons licence, unless indicated paper illustrate a form of negotiated power with govern- otherwise in a credit line to the material. If material is not included in ment responding to civil society concerns. Government the article’s Creative Commons licence and your intended use is not also have their own objectives which may direct bank permitted by statutory regulation or exceeds the permitted use, you will behaviour in particular ways, such as supporting lending need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativeco​ mmons​ .org/licen​ ses/by/4.0/​ . to SMEs to encourage growth, or promoting residential mortgages to expand home ownership, just as they may have reasons why they avoid tougher legislative and regu- References latory frameworks. These kinds of mediation and capture are likely when AHE. (2012). Main Statistics of the Spanish Mortgage Market. Aso- the underlying issues like evictions are fundamentally ciacion Hipotecaria Española. https://www.ahe.es/bocms​ /image​ ​ political and government must be seen to respond to public s/bfle​conte​nt/2006/07/13/446.xls?versi​on=19 outrage. The challenge for civil society is to align its inter- Ali, M. A. (2017). Stakeholder salience for stakeholder frms: An attempt to reframe a heuristic device. Journal of Business Eth- ests with government, to create a political environment ics, 144, 153–168. for the difusion of its objectives (Carberry et al. 2017) Allen, F., & Santomero, A. M. (1998). The theory of fnancial inter- and to hold government to account in terms of both legal mediation. Journal of Banking and Finance, 21(11), 1461–1485. obligations and societal values. Moreover, CR initiatives Ayuso, J. (2013). Un análisis de la situación del crédito en España. Boletín económico, Banco de España, octubre, 81–99. arising from stakeholder coalitions can only be a frst step Bank of England. (2019). Credit union quarterly statistics 2018 towards a more ethical banking sector where the under- Q3. https​://www.banko​fengl​and.co.uk/stati​stics​/credi​t-union​ lying causes of the problem are complex. For example, /2018/2018-q3 an absence of social housing for rent or a well-regulated Behrman, J. N. (2004). Transformation of society: implications for globalization. In J. H. Dunning (Ed.), Making globalization private housing sector may encourage high-risk mortgage good: The moral challenges of global capitalism (pp. 108–144). lending by banks. In this context, there is a limit to what Oxford: Oxford University Press. any kind of banking responsibility initiative can deliver Beschorner, T. (2004). Unternehmensethische Untersuchungen aus if there are endemic problems social such as inadequate gesellschaftlicher Perspektive. Von der gesellschaftsorientierten Unternehmenslehre zur unternehmensorientierten Gesellschaft- housing which requires separate action by government and slehre. Zeitschrift für Wirtschafts-und Unternehmensethik, 5(3), other public authorities. This underlines the signifcance of 255–276. our analysis beyond banking to other sectors where corpo- Beschorner, T., Hajduk, T., and Simeonov, S. (2013). Sector-specifc rate behaviour both directly afects the quality of everyday CR in Europe: Introduction. In: Beschorner, T., Hajduk, T., and Simeonov, S. (eds.) CR in Europe: Government involvement life for many citizens and may be part of wider institu- in sector-specifc initiatives. Gutersloh: Verlag Bertelsmann tional limits. In this sense, promotion of ethical behaviour Stiftung. by business may require broad stakeholder coalitions to Beschorner, T., & Hajduk, T. (2017). Responsible practices are cultur- highlight underlying problems and social priorities. The ally embedded: theoretical considerations on industry-specifc corporate social responsibility. Journal of Business Ethics, relevance of these problems and priorities is stronger than 143(4), 635–642. ever in the post-Covid-19 economic and fnancial context. Bhandar, B. (2015). ‘From proletarians to proprietors’, Jacobin, 1 Janu- Moreover, there should be opportunities to explore the ary 2015.

1 3 M. de la Cuesta‑González et al.

Bank of England. (2012). The Funding for Lending Scheme. Quarterly Dowell-Jones, M., & Kinley, D. (2011). Minding the gap: Global Bulletin, Q4. London: Bank of fnance and human rights. Ethics & International Afairs, 25(2), BOE. (2017). Real Decreto-ley 1/2017, de 20 de enero, de medidas 183–210. urgentes de protección de consumidores en materia de cláusulas Driver, C., & Thompson, G. (2002). Corporate governance and democ- suelo. Boletin Ofcial del Estado, 18. https​://www.boe.es/boe/ racy: The stakeholder debate revisited. Journal of Management dias/2017/01/21/pdfs/BOE-A-2017-653.pdf and Governance, 6(2), 111–130. Brown, J. A., Buchholtz, A. K., & Dunn, P. (2016). Moral salience and Du, S., & Vieira, E. T. (2012). Striving for legitimacy through corpo- the role of goodwill in frm-stakeholder trust repair. Business rate social responsibility: Insights from oil companies. Journal Ethics Quarterly, 26(2), 181–199. of Business Ethics, 110, 413–427. BSA. (2018). BSA yearbook https​://www.bsa.org.uk/BSA/files​ Dubbink, W. (2004). The fragile structure of free-market society: The /35/35940​c29-6be1-4aca-9d13-c8cbd​63e15​2f.pdf radical implications of corporate social responsibility. Business Business Roundtable. (2019). Business Roundtable Redefnes the Pur- Ethics Quarterly, 14(1), 23–46. pose of a Corporation to Promote ‘An Economy That Serves Dunning, J. H. (2004). Making globalization good: the moral chal- All Americans’. https​://www.busin​essro​undta​ble.org/busin​ess- lenges of global capitalism. Oxford: Oxford University Press. round​table​-redef​ nes-the-purpo​se-of-a-corpo​ratio​n-to-promo​ EBF. (2013). European banking sector: Facts & fgures 2013. Brussels: te-an-econo​my-that-serve​s-all-ameri​cans European Banking Federation. Campbell, J. L. (2007). Why would corporations behave in socially English, S. (2019). For all their high hopes the challenger banks have responsible ways? An Institutional theory of corporate social fnished up on the ropes. Evening Standard 12 March 2019. responsibility. The Academy of Management Review, 32(3), https://www.stand​ ard.co.uk/busin​ ess/simon​ -engli​ sh-for-all-their​ ​ 946–967. -high-hopes-the-chall​ enger​ -banks​ -have-fnis​ hed-up-on-the-ropes​ ​ Carberry, E. J., Bharati, P., Levy, D. L., & Chaudhury, A. (2017). -a4089​696.html Social movements as catalysts for corporate social innovation: Esteban-Sánchez, P., de la Cuesta-González, M., & Paredes-Gázquez, Environmental activism and the adoption of green information J. D. (2017). Corporate social performance and its relation with systems. Business & Society, 58(5), 1083–1127. fnancial performance: International evidence in the banking Citizens Advice. (2005). Protection Racket. https​://www.citiz​ensad​ industry. Journal of Cleaner Production, 162, 1102–1110. vice.org.uk/Globa​l/Migra​ted_Docum​ents/corpo​rate/prote​ction​ European Commission. (2018). Action Plan on Sustainable Finance. -racke​t-fnal​.pdf https​://ec.europ​a.eu/info/busin​ess-econo​my-euro/banki​ng-and- Citizens Advice. (2015). A decade of PPI complaints. https​://www. fnan​ce/green​-fnan​ce_en citizensad​ vice.org.uk/Globa​ l/Publi​ c/Advic​ e%20tre​ nds/A%20dec​ ​ European Commission. (2020). Sustainable Finance. https​://ec.europ​ ade%20of%20PPI​%20com​plain​ts_%20bar​omete​r.pdf a.eu/info/business-econo​ my-euro/banki​ ng-and-fnan​ ce/susta​ inabl​ ​ Clark, J. (2011). Civil Society in the Age of Crisis. Journal of Civil e-fnan​ce_en Society, 7(3), 241–263. FCA. (2013). Treating Customers Fairly. 17 May 2013. https://www.​ CMA. (2016). Retail banking market investigation. London: Competi- fca.org.uk/frms​/being​-regul​ated/meeti​ng-your-oblig​ation​s/ tion and Markets Authority. fair-treat​ment-of-custo​mers Coupland, C. (2006). Corporate social and environmental responsibil- FCA. (2014). FCA publishes update on PPI work—firms have ity in web-based reports: Currency in the banking sector? Criti- improved complaints handling and are reopening two and a cal Perspectives on Accounting, 17(7), 865–881. half million old complaints to ensure fair redress is paid. Press CRESC. (2009). An alternative report on banking. Manchester: Uni- Release, 29 August 2014. https​://www.fca.org.uk/news/press​ versity of Manchester/Open University, CRESC. -relea​ses/fca-publi​shes-updat​e-ppi-work-%E2%80%93-frms​ Cruickshank, D. (2000). Competition in UK banking: A report to the -have-impro​ved-compl​aints​-handl​ing-and-are Chancellor of the Exchequer. London: HM Treasury. FCA. (2015). Lloyds Banking Group fned £117m for failing to han- Cruz-García, P., Fernández de Guevara, J., & Maudos, J. (2018). Con- dle PPI complaints fairly. Press Release, 05 June 2015. https​ centración y competencia bancaria en España: el impacto de la ://www.fca.org.uk/news/press​-relea​ses/lloyd​s-banki​ng-group​ crisis y la reestructuración. Banco de Espãna Revista de Estabi- -fned​-%C2%A3117​m-faili​ng-handl​e-ppi-compl​aints​-fairl​y lidad Financiera, 34, 60–80. FCA. (2018). Strategic review of retail banking business models. de Bakker, F. G. A., den Hond, F., King, B., & Weber, K. (2013). https​://www.fca.org.uk/publi​catio​n/multi​-frm-revie​ws/strat​ Social movements, civil society and corporations: Taking stock egic-revie​w-retai​l-banki​ng-busin​ess-model​s-progr​ess-repor​ and looking ahead. Organization Studies, 34(506), 573–593. t.pdf Den Hond, F., & de Bakker, F. G. (2007). Ideologically motivated FCA. (2019). Monthly PPI Refunds and Compensation. Data, Retrieved activism: How activist groups infuence corporate social change March 18, 2019, from https://www.fca.org.uk/data/month​ ly-ppi-​ activities. Academy of Management Review, 32(3), 901–924. refun​ds-and-compe​nsati​on De Weerdt, J., & García, M. (2016). Housing crisis: The platform of Fernández-Olit, B., & De la Cuesta-González, M. (2014). Evaluación mortgage victims (PAH) movement in Barcelona and innovations de impactos ambientales y sociales del negocio de banca com- in governance. Journal of Housing and the Built Environment, ercial en Europa durante el periodo 2006–2010. Estudios de 31, 471–493. Economía Aplicada, 32(2), 567–592. Dentchev, N. A., Haezendonck, E., & van Balen, M. (2017). The role Fernández-Olit, B., Ruza, C., de la Cuesta-González, M., & Matilla- of governments in the business and society debate. Business & Garcia, M. (2019). Banks and fnancial discrimination: What can Society, 56(4), 527–544. be learnt from the Spanish experience? Journal of Consumer Doane, D. (2005). Beyond corporate social responsibility: Minnows, Policy, 42(2), 303–323. mammoths and markets. Futures, 37, 215–229. Ferran, E. (2012). Regulatory lessons from the payment protection Doh, J. P., & Guay, T. R. (2006). Corporate social responsibility, public insurance mis-selling scandal in the UK. European Business policy, and NGO activism in Europe and the United States: An Organisation Law Review, 13(2), 247–270. institutional-stakeholder perspective. Journal of Management Ford, G., & Philipponnat, T. (2013). The role of civil society in hold- Studies, 43(1), 47–73. ing fnancial powers accountable. Journal of Civil Society, 9(2), Dowding, K. M. (1996). Power. Buckingham: Open University Press. 178–195.

1 3 Coalitions and Public Action in the Reshaping of Corporate Responsibility: The Case of the Retail…

Francis, S. (2019). Reclaim packaged bank account fees. https://www.​ Maniora, J. (2017). Is integrated reporting really the superior mecha- money​savin​gexpe​rt.com/recla​im/recla​im-packa​ged-bank-accou​ nism for the integration of ethics into the core business model? nts/ An empirical analysis. Journal of Business Ethics, 140, 755–786. Frankental, P. (2001). Corporate social responsibility—A PR inven- Matten, D., Crane, A., & Chapple, W. (2003). Behind the mask: tion? Corporate Communications: An International Journal, Revealing the true face of corporate citizenship. Journal of Busi- 6(1), 18–23. ness Ethics., 45(1–2), 109–120. Freshfelds. (2019). Quantifying the value in sustainable investments. Maudos, J. (2017). Bank restructuring and access to fnancial services: https​://gbf.fresh​feld​s.com/quant​ifyin​g-the-value​ The Spanish case. Growth and Change, 48(4), 963–990. Froud, J., Tischer, D., & Williams, K. (2017). It’s the business model… Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory Reframing the problems of UK retail banking. Critical Perspec- of stakeholder identifcation and salience: Defning the principle tives on Accounting, 42(1), 1–19. of who and what really counts. The Academy of Management Froud, J., Johal, S., Moran, M., Salento, A., & Williams, K. (2018). Review, 22(4), 853–886. Foundational economy. The infrastructure of everyday life. Man- Moon, J., & Vogel, D. (2008). Corporate social responsibility, govern- chester: Manchester University Press. ment, and civil society. In A. Crane, D. Matten, et al. (Eds.), FT. (2013a). Optimism on Spanish Banks grows as Oligopoly looms. The Oxford handbook of corporate social responsibility. Oxford: Financial Times, 18 December 2013. Oxford University Press. FT. (2013b). EU court strikes down Spain’s eviction law. Financial Moran, M. (1991). The politics of the fnancial services revolution. Times, 15 March 2013. London: Macmillan. FT. (2014). PPI costs and payouts: a snapshot. Financial Times, 3 Feb- Myllykangas, P., Kujala, J., & Lehtimaki, H. (2010). Analyzing the ruary 2014. essence of stakeholder relationships: What do we need in addi- FT. (2016). Fintech newbies pick up some bad old habits. Financial tion to power, legitimacy, and urgency? Journal of Business Eth- Times, 13 May 2016 ics, 96, 65–72. FT. (2019). After PPI, what could be the next banking mis-selling Muellerleile. (2013). Turning fnancial markets inside out: Polanyi, scandal? Financial Times, 30 August 2019. performativity and disembeddedness. Environment and Planning Gao, J., & Bansall, P. (2013). Instrumental and integrative logics A: Economy and Space, 45(7), 1625–1642. in business sustainability. Journal of Business Ethics, 112, NEF. (2009). The ecology of finance. London: New Economics 241–255. Foundation. Grayson, D., & Jane, N. (2013). Corporate responsibility coalitions: Neville, B. A., Bell, S. J., & Whitwell, G. J. (2011). Stakeholder sali- The past, present, and future of alliances for sustainable capital- ence revisited: Refning, redefning, and refueling an underde- ism. London: Routledge. veloped conceptual tool. Journal of Business Ethics, 102(3), Guardian (2013). Lloyds Banking Group fned record £28m in new 357–378. mis-selling scandal. Guardian, 12 December 2013. Novethic. (2012). CSR and responsible reporting: practices of Euro- Guardian. (2011). FSA wins PPI battle in High Court. Guardian, 20 pean banks and insurance companies. Paris: Novethic Research. April 2011. OpenSecrets. (2019). Totals by Sector. https://www.opens​ ecret​ s.org/​ Hiss, S. (2013). The politics of the fnancialization of sustainability. overv​iew/secto​rs.php?Cycle​=2018&Bkdn=DemRe​p&Sortb​ Competition & Change, 17(3), 234–247. y=Rank Holzer, B. (2008). Turning stakeseekers into stakeholders: A politi- PAH. (2014). News release at https​://afect​adosp​orlah​ipote​ cal coalition perspective on the politics of stakeholder infuence. ca.com/2014/05/20/datos​-desah​ucios​-pah-recla​ma-ilp/ Business & Society, 47(1), 50–67. PAH. (2018a). News release at: https​://afect​adosp​orlah​ipote​ Hurley, R., Gong, X., & Wakar, A. (2014). Understanding the loss of ca.com/2018/06/14/the-platform-of-peopl​ e-afec​ ted-by-mortg​ ​ trust in large banks. International Journal of Bank Marketing, ages-pah-by-its-spani​sh-acron​ym-retur​ns-to-the-fray-defen​ 32, 348–366. ding-famil​ies-afec​ted-by-black​stone​s-extor​tion/ ICB. (2011). Final repor—Recommendations. London: Independent PAH. (2018b). Housing Data.https​://pahba​rcelo​na.fles​.wordp​ress. Commission on Banking. com/2018/02/housi​ng-data-infor​m.pdf IMF. (2012a). Spain: fnancial stability assessment. Washington, D.C.: Panther, T., & Farquhar, J. D. (2004). Consumer responses to dis- International Monetary Fund. satisfaction with fnancial service providers: An exploration IMF. (2012b). Spain: The reform of Spanish Savings Banks Technical of why some stay while others switch. Journal of Financial Notes. Washington, D.C.: International Monetary Fund. Services Marketing, 8, 343–353. Jackson, G., & Apostolakou, A. (2010). Corporate social responsibility Parker, M. (2002). Against management: Organization in the age of in Western Europe: An institutional mirror or substitute? Journal managerialism. London: Polity Press. of Business Ethics, 94(3), 371–394. Paulet, E., Parnaudeau, M., & Relano, F. (2015). Banking with Knight Frank. (2018). Your Future, Now.https​://conte​nt.knigh​tfran​ ethics: Strategic moves and structural changes of the bank- k.com/resea​rch/1423/docum​ents/en/uk-retai​l-banki​ng-secto​ ing industry in the aftermath of the subprime mortgage crisis. r-prof​le-2018-5188.pdf Journal of Business Ethics., 131(1), 199–207. Lewis, J. K. (2016). Corporate social responsibility/sustainability Pay.uk. (2019). Current Account Switch Service Annual Report 2018. reporting among the Fortune Global 250: Greenwashing or London: Pay.uk. green supply chain? Entrepreneurship, Business and Econom- Pianta, M. (2013). Democracy lost: The fnancial crisis in Europe ics, 1, 347–362. and the Role of Civil Society. Journal of Civil Society, 9(2), LSE. (2010). The future of fnance. London: LSE. 148–161. Lukes, S. M. (1976). Critical note: Reply to Bradshaw. Sociology, Populus. (2017). Trust in banks. What went wrong and how to fx 10(1), 127–132. it. https://www.popul​ us.co.uk/insig​ hts/2017/12/trust​ -in-banks​ ​ Lukes, S. M. (2005). Power: A radical view. London: Macmillan. -what-went-wrong​-and-how-to-fx-it/ Lyon, T. P., & Maxwell, J. W. (2011). Greenwash: Corporate Environ- Money, P. (2012). Banking vs democracy: How power shifted from mental Disclosure under Threat of Audit. Ross School of Busi- parliament to the banking sector. London: Positive Money. ness Working Paper Series, No. 1055. Powell, W. W., & DiMaggio, P. J. (1991). The new institutionalism in organizational analysis. Chicago: Chicago University Press.

1 3 M. de la Cuesta‑González et al.

Pradel, M., García, M., & Eizaguirre, S. (2013). Theorizing multi- Shropshire, C., & Hillman, A. J. (2007). A longitudinal study of sig- level governance in social innovation dynamics. In F. Mou- nifcant change in stakeholder management. Business & Society, laert, D. MacCallum, A. Mehmood, & A. Hamdouch (Eds.), 46(1), 63–87. International handbook of social innovation: Collective action, Siew, R. (2015). A review of corporate sustainability reporting social learning and transdisciplinary research (pp. 155–168). tools (SRTs). Journal of Environmental Management, 164(1), Cheltenham: Edward Elgar Publishing Ltd. 180–195. Railborn, C. A., & Payne, D. (1990). Corporate codes of conduct: Soana, M. G. (2011). The relationship between corporate social perfor- A collective conscience and continuum. Journal of Business mance and corporate fnancial performance in the banking sector. Ethics, 9, 879–889. Journal of Business Ethics, 104, 133–148. Rolof, J. (2008). A life cycle model of multi-stakeholder networks. Spanish Central Bank. (2019): Financial Stability Report, Spring 2019. Business Ethics: A European Review, 17(3), 311–325. Sternberg, E. (2011). How serious is CSR? A critical perspective. In Roca, L. C., & Searcy, C. (2012). An analysis of indicators disclosed C. Crouch & C. Maclean (Eds.), The responsible corporation in in corporate sustainability reports. Journal of Cleaner Produc- a global economy. Oxford: Oxford University Press. tion, 20(1), 103–118. Steurer, R. (2010). The role of governments in corporate social respon- Schaefer, A., & Kerrigan, F. (2008). Trade associations and corpo- sibility: Characterising public policies on CSR in Europe. Policy rate social responsibility: Evidence from the UK water and Sciences, 43(1), 49–72. flm industries. Business Ethics: A European Review, 17(2), Tashman, P., & Raelin, J. (2013). Who and what really matters to the 171–195. frm: Moving stakeholder salience beyond managerial percep- Schaltegger, S., & Burritt, R. L. (2010). Sustainability accounting for tions. Business Ethics Quarterly, 23(4), 591–616. companies: Catchphrase or decision support for business leaders? Tischer, D. (2013). Swimming against the tide: Ethical banks as coun- Journal of World Business, 45, 375–384. termovement. Journal of Sustainable Finance & Investment, Scherer, A. G., & Palazzo, G. (2011). The new political role of business 3(4), 314–332. in a globalized world. Journal of Management Studies, 48(4), Tischer, D., & Remer, S. (2016). Growing social banking through 899–931. (business) associations’. In O. Lehner (Ed.), Routledge handbook Scherer, A. G., Palazzo, G., & Baumann, D. (2006). Global Rules and of social and sustainable fnance. London: Routledge. Private Actors: Toward a New Role of the Transnational Corpo- Vives-Miró, S., & Gutiérrez, A. (2017). Extracting rents through fore- ration in Global Governance. Business Ethics Quarterly, 16(4), closures: The rescue of Catalunya Banc as a new urban strategy 505–532. following the burst of the Spanish bubble. Miscellanera Geo- Schmidt, R. H., Hackethal, A., & Tyrell, M. (1999). Disintermediation graphica, 21(4), 151–159. and the role of banks in Europe: An international comparison. Which? (2018). How to complain if you’ve been mis-sold a bank Journal of Financial Intermediation, 1(1–2), 36–67. account. https://www.which​ .co.uk/consu​ mer-right​ s/advic​ e/how-​ Scholte, J. A. (2013). Civil society and fnancial markets: What is not to-compl​ain-if-youve​-been-mis-sold-a-packa​ged-bank-accou​nt happening and why. Journal of Civil Society, 9(2), 129–147. YouGov. (2018). Ten years after the fnancial crisis, two-thirds of Brit- Scholtens, B. (2009). Corporate social responsibility in the inter- ish people don’t trust banks. https://yougo​ v.co.uk/topic​ s/fnan​ ce/​ national banking industry. Journal of Business Ethics, 86(2), articles-repor​ ts/2018/08/29/ten-years​ -after​ -fnan​ cial-crisi​ s-two-​ 159–175. third​s-briti​s Seyfang, G., & Gilbert-Squires, A. (2019). Move your money? Sus- tainability transitions in regimes and practices in the UK Retail Publisher’s Note Springer Nature remains neutral with regard to Banking Sector. Ecological Economics, 156, 224–235. jurisdictional claims in published maps and institutional afliations. Shaefer, A. (2013). Sector specifc corporate responsibility in the UK. In T. Beschorner, T. Hajduk, & S. Simeonov (Eds.), CR in Europe: Government involvement in sector-specifc initiatives (pp. 241–262). Gutersloh: VerlagBertelsmann Stiftung.

1 3